1. Amortisation

Amortisation

Find out about the amortization requirement for mortgages and how the amortization rules affect you.

The advantages of amortisation

It is always a good idea to reduce your loans

Even if, according to the amortisation requirements, you do not need to amortise, it is a good idea to reduce your loans.

  • Lower loan-to-value means greater security in the event of a deterioration of your financial situation, for example, as the result of unemployment, illness or retirement.
  • As your loan decreases, so too do your interest expenses.
  • Amortisation reduces the loan-to-value ratio and can mean that the amortisation requirement decreases.
  • If you have amortised all or part of your mortgage loan and sell your property at a time when property prices have been rising, you will have more money available for a down-payment on your next home.

How much do you have to amortise?

If you borrow 50-70 per cent of your home’s value, the loan must be repaid by one per cent of the total loan amount per year. If you borrow above 70 per cent of the value, you must repay two per cent of the total loan amount per year. In addition to this, if you are borrowing more than 4.5 times your annual gross income, you must repay a further one per cent of the total loan amount. If the loan is under two people’s names, we count their combined salaries.

Loan-to-value ratio Loan less than 4.5 times the gross salary Loan more than 4.5 times the gross salary
Below 50 % - 1 %
50-70 % 1 % 2 %
More than 70 % 2 % 3 %

The debt ratio reflects how much you are borrowing in relation to your gross salary.


What is amortisation?

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Amortisation

Amortisation means that you repay your loan. When you amortise your loan every month, the loan decreases by the same amount.

Amortisation requirement

Different amortisation requirements apply, depending on the loan-to-value ratio and debt ratio in question. 

The loan-to-value ratio represents the size of the mortgage loan in relation to the property’s market value. 

Debt ratio

The debt ratio reflects how much you are borrowing in relation to your gross salary.